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Suman Rani

· started a discussion

· 1 Months ago

187654.0 (Question: 187654.0 )

solution plz

Question:
Issue of convertible bond with a conversion price of Rs.50 & conversion ratio of 10:1 is sold to public for Rs. 1000 per bond& the market price of the common stock at the time of issuance is Rs. 92 per share. The conversion premium is:- 
Options:
A) Rs. 920 
B) Rs. 80 
C) Rs. 420
D) Rs. 500 
E)

None of these

Solution:

Ans (b)

Knowledge Expert

· commented

· 1 Months ago

Apply, Conversion Premium = Bond Price - (Stock Price × Conversion Ratio)
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